Selling a home "as is"

bulletandpima · April 15, 2010, 10:21pm

Dragon, I knew where you were going before I even finished reading the sentence.

I would love to say it doesn’t happen, but it does. In VA it rarely happens except for an agency that shall remain nameless (not a national co). Realtors and Mtg brokers are licensed like doctors, attorneys and teachers in the state. They can lose their license from the state board, not VAR (VA Assoc of Realtors), but the actual state for ethics. In other words it isn’t worth the risk

TIP: BUYERS

<ol>
<li>Contact your current mtg company and deal with them directly if yor are in good standing. Most likely they will cut you a deal at least on discount points.</li>
<li>If you are A paper 700+ credit score shop around. You automatically lose 4 pts off of your score for a mtg app., but you can apply to 100 companies in 120 days and not get anything more taken off. It is not like a car loan.</li>
<li>The good realtor will offer you at least 3 mtg companies. Don’t assume they are getting a kickback, just understand that not every mtg company, especially brokers, can get you to the table. The realtor is suggesting those brokers/lenders because they know historically that they get you to the table on time.</li>
</ol>

Don’t show up on that date and you are considered IN DEFAULT. The seller can sue you for the EMD and the entire cost of the house. RARE on the entire cost, but they have that right.

<ol>
<li>If you opt for your own lender/broker immediately hand over their number. Realtors spend hours on the phone with them making sure you are clearing underwriting or the appraisal. You need them to be kept in the loop.</li>
<li>NEVER EVER PAY FUNDING FEES, if you must make sure that the broker than gives you a loan origination discount fee to bring it to 0.</li>
<li>Get a good faith from the lender when you get the prequal loan. If they refuse than you need to re-think using them</li>
<li>Ask if the good faith is locked in, for example. You get a good faith at 5 3/4, but tomorrow it goes to 5 7/8 are you locked in at 5 3/4</li>
<li>Ask if the loan floats, for example, you are locked in at 5 3/4, but the rate drops to 5 1/2, are they going to float you down to 5 1/2.</li>
<li>Rule of thumb take the mtg rate convert it into a dollar sign and add 1. Now multiply that by the loan amt. This should be your rough ball park number for your mtg, including taxes and insurance, not PMI.</li>
<li>Try to always get at least an 80/15/5. This means you will take an 80% loan, and a 15% second, but 5% down. You avoid PMI which will save you a fortune. If you do this method, ask the lender to make the 15 a home equity line, because that means as you pay it off you will be able to access it for the what if scenario…vacations are not what if…HVAC is!</li>
</ol>

I always offer 3 lenders, one is our national company (RE), one is a lender and one is a broker. I give them their business cards and tell them to contact them. I contact these people to tell them to expect a call and this is their price range. I never discuss the buyers financial status, I just ask them to give me a yeah or a nay for approval purposes.

Again remember there is a difference between a lender and a broker and it is very important buyers understand the difference.

One last thing if the realtor or lender says don’t pay for title insurance RUN! RUN FAST! Title insurance is also a murky issue to buyers and sellers because it just doesn’t make sense since they have home owner insurance. Here’s the deal, the previous owner didn’t pay a bill to an HVAC mechanic for 5K, the title was cleared without catching it. The title insurance will pay for your attorneys fees to go to court, your homeowners won’t. The HVAC is a lien on the home, not the owners and that is why homeowners won’t pay for it in the most simplistic terms. Buy a brand new construction home is also a popular one. Out of the woodwork long lost sibling comes with a will and says I never agreed to the sale of the land and I still own it. Title insurance will pay for those legal fees.

Instead of trying to save money and not buy it, title insurance for the owner can be re-issued at a much lower rate, @1/3 of the cost, IF you ask the owners to find who they had the insurance with. It isn’t like going ALL-State vs Nationwide, it is a set amount and can only be lowered if it is re-issued.

A couple more days and I will have tutored you all enough to get an RE license ;)

dragonmom · April 15, 2010, 10:57pm

Wow, are there actually places where this is considered optional? I always assumed it was required. I worked one summer at 18 as a temp at a title co “runner” taking the deeds to the courthouse, etc. It was enough to convince me that titles were very important…

mousegray · April 16, 2010, 2:05am

b and p, are you saying that one should buy a home with 5% down payment and take the rest in loans? I thought you should pay as much down as you can afford?

mousegray · April 16, 2010, 2:08am

You have tutored me enough to make me realize that I will never ever entertain the thought of selling my home, ever again.

Sedruola · April 16, 2010, 8:48am

Hi there, I hear a lot of sellers say the same thing you do and this is what I usually tell them “the price of the fixes can bring you a lot bigger return than pricing low and giving an allowance to boot.”

I know you may want to just get out of your house, however, I’d think you want to get the most you can without spending a fortune. There are two things I’d recommend initially: 1) Contact a local Accredited Staging Professional and have them give you a consultation. A Professional stager will help you pinpoint everything that needs to be done. 2) Select the projects you think are doable and do them, then de-clutter, clean like you’ve never cleaned before and freshen.

You don’t have to go out and spend a fortune to get your home to sing. Go out your front door to the curb then turn around and look at your home as if you were seeing for the first time, then walk up to your home look at the door etc. and go in. Walk through your house like you were a buyer and take notice of things the potential buyer will take notice of. That will give you a new perspective on your home. Here are a few ideas:

<ul>
<li>Clean all the carpets to remove hair and odors from the home. Potential buyers don’t react well to worn, dirty carpets or “funny” smells</li>
<li>Paint any wall that looks like it needs a freshen. It the walls look dirty and uncared for, the buyers will wonder what about the things they can’t see? I know when people think neutral they think “beige” however, there are a number of hues in the neutral palette that appeal to lots of people. If your decor is blue, there are neutrals in blue tones, etc. Talk to your home improvement salesperson to get ideas and help.</li>
<li>De-clutter, not to the point of being stark, but to where people can actually see the size of the rooms and house</li>
<li>De-personalize, the best way to get a buyer to an offer is by giving them the opportunity to picture themselves in your home, they have a hard time doing that if there are photos and memorabilia from “strangers” all over the house (plus our natural curiosity will incline us to look at photos, therefore, not the house.</li>
<li>Get your agent to price appropriately, if you live in a well sought out neighborhood, many buyers will see the potential in your house and look past the needed updates if your home is clean and shows well. If the price is right and the buyers feel comfortable, you’ll be able to sell.</li>
</ul>

I hope that helps, good luck!

Sedie

bulletandpima · April 16, 2010, 9:38am

Mouse, no what I am saying is if you don’t put 20% down or don’t have a VA loan, you will be required to pay PMI. PMI is much more expensive than taking the second loan.

You can also put 20% down and ask the lender to do it like an 80/15/5. What happens is they immediately open that equity line, but at settlement since you put 20 down, the line will have the 15% availability, but no balance, thus you have a safety net. Many buyers elect this route because if they don’t do it then, they will pay re-fi costs if they do it later and that could be thousands of dollars depending on the size of the second.

DO NOT go this route if you see it as a new credit card because now you will hurt yourself fiscally. If you don’t have great restraint it will be your demise.

Some also choose this route because they know that in a few months they will need a new car, and since the equity line is tax deductible it is seen as a better option than taking a typical car loan. Caveat that only applies if the car loan is in the 5% rate.

Others that we call slumlords use this to buy rental properties. They actually create their own Ponzi scheme. They then take that 15% equity and use it to buy a rental using another 80/15/5, and so on and so forth, I have seen buyers land up buying 3 or 4 properties just from that 15%. Granted they continue to get smaller and less desirable, but they don’t care since they will be renting them.

You are required to buy lender’s title insurance, but not home owner’s title insurance. The lender has a vested interest and will be named in any lawsuit since it is a lien against the home, not the person. That means they will hire an attorney to defend them not you, even though you paid their title insurance portion, it does not mean you get to ride on their coattails and get off free. Your owners title insurance is to defend your name on the title.

It is confusing, and trust me it is much more complicated than that, but I just am trying to make it as simplistic as possible to explain why you need to buy it.

As far as de-cluttering I 100% agree. If you still have a box that you never owned from when you moved in 5 yrs ago…DUMP IT, because obviously you lived quite nicely for 5 yrs without it.

De-personalizing, I am the rare bird. Everyone says to remove personal pictures because you want them to see it as their own home or that they will be busy looking at the pics and not the house. I have yet to find this is true. Yes, they take a quick gander, but once their curiosity is filled they are back to business and looking at the house, not the pics. Secondly, many times it actually makes an emotional connection…look honey, isn’t that baby cute or how sweet they all look!

The flip is the couple could be a 2nd marriage and the people in the pic in the home might look like the ex!

It is important to realize that if you de-picture the home be prepared to paint. Many people have pictures that are portraits or collages, remove them after hanging there for 5 yrs and I can guarantee you that there will be discoloration of the wall. The next thing you know is that one picture has forced you to repaint the whole house. I.E. livingroom is connected to the dining room which is connected to the kitchen which is connected to family room. You intended to only do one room, but as soon as you had it done, the attaching room looked dirty, so you kept going.

If you don’t paint and you do have that X marks the spot from de-picturing, the buyer will do 2 things. 1. remember the house and designate it as the one with the X marks the spot home, and you don’t want that to be your description. 2. Lower the price because they already know that the walls will have to be repainted and you don’t want to be in that position.

The simple thing to do is to keep the pic up. Realize to get the walls back to not having that mark you will have to bleach the entire wall since the picture never saw day light it will be your original color.

I also agree if the carpet is really in bad shape, go to the cheapest store and buy all new carpeting. The fact is if the buyer loves your home and you are a top contender they are going to make their decision based on that carpeting. They are either going to low ball you and use carpeting as an excuse for their price or they are going to choose the 2nd runner up because it has less work to do on it to get to their stds. Either way your home sales price will decrease. It will decrease because it will be long on the market because of the carpet, and eventually the person who buys it got a good deal because you lowered the price since it was on the market long AND you went off and gave a carpet allowance on top of that!

GO back to my adage don’t be busy picking up the pennies while you jump over the nickels.

Additionally sellers will say I will give a carpet allowance and have the realtor put this in the remarks. Theory is the buy gets to choose their carpeting…aren’t I considerate philosophy. REALITY buyer sees it as a red flag that the owners know the house needs work and they use it to their advantage to nitpick about everything and still offer a lower price. Remember this is not personal it is business. They want the best house for the lowest price, you want the best price.

On top of that in our MRIS/MLS forms we only have a limited amt of space to describe the home. Writing cash allowance takes space and the realtor will then have less room to hit a high light, what you essentially did was make them advertise a negative. Not a good sales technique.

TIP of the day:

Remove your screens and place them in the garage. You would be amazed how much brighter your home will look without the screens and as I have said before nobody ever walks in and says OH this house is too bright!

Also make sure you check your front door lock and that it works easily. Nothing like a realtor with clients on your step forcing the door to open to send off a bad signal. It also gives them time to really inspect the outside of the home. More times than not if this happens the man will wander off and start looking really hard at the outside. If it doesn’t happen they usually glance, walk around, but they have already made their decision from the inside out.

momma-three · April 16, 2010, 9:44am

You have received so much good advice. The houses in my area that are selling are pretty much in move in condition. Walls are freshly painted and wood floors (a must) are pristine. Carpet on floors just won’t sell a house in some areas. It might be worth it to do some of the work yourself to save on the costs and ask your realter about the idea of putting in wood floors. The realter may tell you that it won’t make much difference but I would ask for his/her opinion.

bulletandpima · April 16, 2010, 9:54am

No realtor worth their weight in salt would say don’t put in wood floors if the flooring needs to be replaced. They may say don’t put it in the bedroom, but they would never say not to in other areas.

Reality is realtors know that wood floors in appraisal standards are an upgrade, thus the house will appraise higher. Carpet even the top of the line will not give you one more penny. Wood floors will.

Caveat: If the home is in at the top of the low end market, they may say it is your choice, but you already are going to be the top price and you don’t want to price yourself out of the market.

Golden rule in real estate: Buy the cheapest house in the better neighborhood than the most expensive home in the lower neighborhood.

As far as carpeting the biggest turn off to every buyer is carpeting in a bathroom. So if you have it remove it. You can go cheap with high end vinyl and still be better off than the carpet in the bathroom.

Tip:

There are realters and realtors. There is a huge difference. REALTORS are recognized as a member of their state and the nation. They must adhere to the ethic laws that NAR has created. Realters have not paid dues to the association, but have a license. They are not held to the laws set forth by NAR.

Make sure to read that business card if you see an er and not an or at the end of REAL, don’t go there. All national companies will require that their agents are OR.

Chedva · April 16, 2010, 10:04am

Again, it’s “know your area.” I was told by not just one reputable, successful realtor that putting wood floors in our house would not be cost effective on resale because the rooms are just too small. It wouldn’t add enough to the resale value to cover the cost of the hardwood. (Of course, we’re going to do it anyway because we want it, not to sell.)

bulletandpima · April 16, 2010, 10:59am

Bullet and I always have a deal. He will do any upgrades if I agree to let him buy the “right” tools. In our last home he put down @2000 sqft of hardwoods. We bought the floors on line because even with shipping it was cheaper than Lowes. We did all of the sweat equity. He got new tools, and it was still cheaper than buying high end carpeting.

Yes, a smaller home will not recoup like a larger one, but again clients wanting carpeting over wood floors is becoming rare. Housing demands swing like a pendulum, back in the 50/60’s everyone had hardwood, go to the 70/80’s it was carpeting, 90’s it was ceramic/pergo, 00’s it is back to hardwood.

Look at kitchens, 20 yrs ago it was beige or black appliances, 10 yrs ago it was white, 5 yrs ago it was stainless, now it is black again. Same with cabinetry, 10 yrs ago a dark stain would be ripped out and replaced with white, now the white cabinets are being replaced with darker stained.

Take a big picture look, if you can afford to do anything in sweat without causing issues, than do it. Don’t lay a hardwood floor if you never used a mitre saw or an air nail hammer. Know your limits, because shoddy craftmanship will hurt you when it comes to re-sale.

Treetopleaf · April 16, 2010, 11:02am

LOL, it’s clear I’ll have to move out of my house before attempting to sell - I’ll need to refinish the wood floors, paint, declutter, etc.

b&p, if I went into a house w/o screens, I would ask to see the house again with screens. I’m not kidding, I’d want to make sure I didn’t have the hassle of replacing screens, and good sized, functional windows are really important to me. Maybe just removing window treatments would work? My neighbor had windows replaced and said she wasn’t sure what she’d do about treatments, since so much light was now entering the house.

I’m the one with the blacktop replacement nearby. It’s a normal neighborhood, no HOA involved. The cement drive was no doubt in bad shape; many are around here since they are decades old. The people that bought the foreclosed house are obviously fixing it up for resale. It will be interesting to see how it goes. I have a feeling that the blacktop will prevent getting top dollar, and I’d wonder what other shortcuts they took. All for the few grand difference in driveway costs.

bulletandpima · April 16, 2010, 12:05pm

As far as window screens, I also tell my clients to spic and span the garage, after they do I have them placed in a visible place so that any and every client entering can say OH, there are the screens. Honestly that can go for or against you because there are clients like you that question why they are in the garage and not in the windows. However, most get over it because they than think, what’s the biggie I don’t ever open my windows anyway!

Again that is like everyone else says…KNOW YOUR MARKET. In Alaska people open their windows, in NC they don’t!

I do agree about the blacktop issue. I sell to flippers, usually they are general contractors and this is their side business. They are good flippers because they understand that spending a little bit more means making a lot more, additionally, they have connections to get good rates from the subs.

The flipper to be concerned about is the one that believes I can do it myself and flips using all products from Lowes. They are paying retail and that means they need to cut costs and go with inferior products.

As a realtor it is easy to see when entering the home which type of flipper the owner is by simple things. For example, the DIY flipper will buy the low end cabinets, no raised panels, no self closing drawers, no knobs. However, they will put in the high end appliances to divert your attention. The professional flipper will go median on everything. The cabinets will not be stock supplied, but the appliances will be Kenmore Elite and not GE Professional. FYI They are both the exact same, but GE is more due to the name.

The DIYer will place in the bathroom high end faucets, but skimp on the ceramic tile The professional will put in high end flooring and skimp on the faucet.

The DIYer will put in the 7 arm brass chandelier in the dining room. The professional will pay 50 bucks more for a unique chandelier AND put it a dimmer switch in as the light switch.

The DIYer will put 2 inch base molding. The professional will put in 4 inch.

The DIYer will buy higher quality carpeting and lower padding. The professional will do neither, except for bedrooms and put hardwoods in.

The DIYer will put all new landscaping in and fresh mulch. The professional will trim back, plant flowers and new mulch.

The professional flipper knows where to cut corners to their best advantage, while getting a higher return. They work in the field and know what is trending, the DIYer eventually tires out and throws their hands up in the air because of exhaustion. It is apparent because you can see how the house is disconnected. Master Bath out the door, guest bath looks like they slapped paint on and called it a day.

If the house you are looking at is not on the same par in quality across the board regarding each room, LOOK deeper, because you might have electrical, plumbing, or other issues.

TIP:

Ask the realtor to pull the tax record before you write.

The record will tell you how much they bought it for and when. This will give you a better idea of what to write as a price.

For example, if the home was bought in 05 for 200K and now they are selling at 210. The fact is they have no wiggle room, they are at the bare bones…they will be required to pay RE agents, plus closing costs.

The home was bought in 09 for 200, and now they are asking 400. Tally in your mind how much it would cost to hire someone to gut every room and bring it to this level. Now add in RE and closing. That should tell you how much profit they are walking away with. Be honest, this is their business they are expecting to make some money, and do have additional costs like carrying the mtg for X amt of months, and then they will pay cap gains since they did not own it for 2 yrs. Don’t get to the point that you see them as an owner of a home and not as a business owner. This is business to them, it isn’t their hobby.

Treetop I don’t know where you are, but in NoVA I would say it is a DIYer because the professional would look at the neighborhood and have paid for blacktop, but looked into stamped pavement which would have been the middle of the row. If not that they would have placed pavers on each side of the drive to give a unique curb appeal, while cutting the cost of concrete. They are very aware the curb appeal is a top issue.

stevensmama · April 16, 2010, 1:11pm

Thanks for the great advice, B&P! I wish we could put the house on the market sooner. Unfortunately, my H can’t retire until October 8. He might have as much as 5 weeks of vacation time saved up by then, but that would still only bring us up to Labor Day weekend. I’m sure parents would want to be settled in before then. He might not even have the 5 weeks, because he’s been having a lot of medical problems and he’s out of sick leave.

I’ll give your information to my realtor. We already have to repaint the entire house and replace all of the carpet, since the last time was when we moved in 23 years ago. :eek: We don’t have the time or money to do kitchen upgrades, so we’re stuck in the middle between the foreclosures and the flippers’ renovated houses. Although I really don’t understand why someone who wants granite countertops and stainless steel appliances would want to live in my neighborhood!

bulletandpima · April 16, 2010, 3:55pm

Just take a deep breath AND believe! It will work out, and once you get through it you will laugh at how you were going crazy.

I don’t know where you are in Fairfax, but the positive is as I said earlier the housing market is a pendulum, maybe yours is swinging higher because of the flippers.

It is important that your realtor understands your DH’s medical condition. If it is at all possible always try to leave the house when clients come. If you can’t than ask the realtor to call first so you can plan on leaving. 99% will call for an apptmt, and they will do it 2-3 hrs ahead of time, it could even be 7-8 hrs, however if you put 24 hr notice which is an otpion in every state, you could lose the sale since clients truly don’t like house hunting. They want to find the house and write a contract, they don’t want to spend hrs upon end on top of days upon end in a car looking at homes. If they did want to do that than that means they really want a new construction home!

hayden · April 16, 2010, 5:16pm

stevensmama raised a good question when she said october might be a bad time to sell. I hear some people say most people want to buy at the end of spring, so the kids don’t get dislocated. I have heard others say that late spring is not a good time, because there’s so much inventory.

Is there a good or bad time to put your home on the market? If so, when?

dmd77 · April 16, 2010, 5:26pm

BandP: I may be weird, but I do want to look at lots of houses if I’m moving to a new location. I want to know what the houses are like at the price range, and I need to look at the various neighborhoods. I was fortunate enough to have a great agent when we moved to Portland–I looked at at least 80 houses. I did a lot of the looking at open houses, as well. It was what we did weekends. We rented for six months. In the end, we bought the second house we looked at… it had sold and then the sale failed–we bought it the day it came back on the market.

kjofkw · April 16, 2010, 7:04pm

Most articles I’ve read which outline the pay-back you can expect to receive on various improvements are less than 100%-- Even updated kitchens and baths. Perhaps you may get 80% return. So why even bother updating? It will sell faster. If you’re making mortgage (and tax) payments, that could make a difference in the long run. But it is rare to recoup your investment. Paint, de-cluttering and deep cleaning on the other hand typically pay back more than you paid.

The few realtors we’ve dealt with in the long ago past, would come in and praise our house, as-is, and suggest only a few minor modifications. Only after it did not sell, would they start to pick apart all the things we should improve. Remember a faster sale is also more money in their pocket too (same amount, but less invested by them).

mousegray · April 16, 2010, 7:35pm

realter vs realtor?? I had no idea. What a weird semantic distinction.

This thread is so educational. How does one go about becoming a “stager”? Is there a certification for it?

Selling a home "as is"

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